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The major parties and ‘corrosive’ welfare

Posted 20/08/2010 by Luke Buckmaster

Where do the major parties stand on welfare policy? In what direction can we expect welfare policy to be taken throughout the course of the next parliament? One thing clear from the election policy announcements of the major parties is that there is likely to be a further strong emphasis on addressing what each describes as the ‘corrosive’ effects of welfare. This would continue the recent focus of both Labor and the Coalition on the idea that while welfare is necessary for the alleviation of disadvantage, it also has a role in maintaining or even causing disadvantage.

Labor’s main welfare policy document commits a re-elected Gillard Government to modernising Australia’s welfare system through ‘creating opportunity and requiring responsibility’. The document refers to the need ‘to spread the dignity and purpose of work, end the corrosive aimlessness of welfare and bring more Australians into mainstream economic and social life’.

Similarly, the Coalition’s policy document on employment participation commits to providing incentives to move people from unemployment to the workforce. It argues that:

Unemployment can have a corrosive impact on individuals, families and society at large. In addition to the economic costs, long term unemployment can be particularly debilitating. Allowing people who could readily work to stay out of the workforce is cruelty not compassion.

Labor’s approach is reflected in a range of policy commitments aimed at providing incentives for participation in the workforce or education. These include:

payments of up to $6,000 for unemployed people who relocate to take up a job, and $2,500 for the employer who hires them—this would be trialled with up to 2,000 eligible job seekers from 1 January 2011

new penalties for non-attendance at employment services appointments—job seekers will be made aware that failure to attend appointments or other required activities may result in an immediate withholding of income support

new arrangements for payment of the FTB-A end of year supplement for families on an income support payment, under which recipients with a four year old, will be conditional on the completion of a health assessment, such as the Healthy Kids Check

increasing the maximum payment rate of Family Tax Benefit Part A (FTB-A) by more than $150 per fortnight for teenagers aged 16 to 18 years who are in school or an equivalent vocational qualification and

allowing age pensioners to earn up to $6500 a year extra without it affecting their pension.

The theme of requiring greater responsibility from welfare recipients is also reflected in the Rudd-Gillard Government’s major welfare reform, the new national income management scheme (initially introduced throughout the Northern Territory from 1 July 2010). Under this scheme, welfare recipients deemed to be ‘at risk’ have half of their payments set aside for what the Government terms ‘priority needs’ such as food, rent and utilities. The income management reforms apply to people in the following categories:

people aged 15 to 24 who have been in receipt of Youth Allowance (other), Newstart Allowance, Special Benefit or Parenting Payment for more than three of the previous six months

people aged 25 and above who have been in receipt of specified payments, including Newstart Allowance and Parenting Payment for more than one year in the previous two years

people referred for income management by child protection authorities and

people assessed by Centrelink social workers as requiring income management due to vulnerability to financial crisis, domestic violence or economic abuse.

The Coalition has also committed to a range of policies aimed at increasing workforce participation, including:

payments of up to $6,000 for unemployed people who relocate to a regional area to take up a job offer, and up to $3,000 for those who move to a metropolitan area—as with the similar Labor scheme, $2,500 will be paid to the employer who hires them

payments of up to $4,000 for long-term unemployed young people who find a job and keep it for up to two years

payments of $3,250 for employers that hire workers aged 50 or older and

an expanded paid parental leave scheme under which mothers would be paid for 26 weeks at full income replacement (capped at $150,000) (the more modest Labor Government scheme allowed for 18 weeks at the minimum wage).

In relation to income management, the Opposition leader, Tony Abbott, has indicated that a Coalition Government would ‘carefully review the operation of this wider form of quarantining after July next year, when it has been in operation for 12 months, with a view to extending it more widely across Australia’.

While policies aimed at increasing workforce participation described above reflect a long term trend in Australia and other OECD countries towards active labour market programs, the emerging policy consensus around the need for governments to actively intervene in the lives of welfare recipients in order to ameliorate the negative consequences of welfare is, arguably, a more recent phenomenon.

This move towards a more interventionist (or paternalist) approach to welfare policy raises a range of questions that the next parliament may find itself having to address. These include:

what evidence will be required to evaluate whether the new approach to welfare has been a success?

what (if any) limits ought there be on the nature and extent of interventions in the lives of welfare recipients?

to what extent can welfare reforms cause individuals to change their behaviours in a meaningful and enduring way (is there a paradox in using paternalistic means to assist people to become less passive and more personally responsible?)?

The general direction of welfare policy appears to have been settled (at least in the short term) around the issue of assisting (and, if regarded as necessary, coercing) individuals to avoid the pitfalls of welfare. However, answers to questions such as the above will most likely help determine the specific texture of welfare policy over the course of the next parliament and influence its direction over the longer term.